Belgium-Dexia CDS Compression Update - 110 bps In One Week

A week ago, after we had already correctly predicted the unwind of the Dexia long CDS trade on the way up in advance of the bank's nationalization announcement, we suggested a Belgium-Dexia compression trade, now that the bank is the ward of not only Belgium but France. Quite obviously, the idea is that Dexia may well trade inside of Belgium once Belgium itself is downgraded by not only Moody's but also Fitch and S&P (look at today's blow out in Belgium CDS for an indication) imminently, while Dexia still has the implicit backing of AAA-rated (for now France). Net result: 110 bps in one week, from 452 bps last Friday to 343 bps today. We expect a pick of at least another 150 bps before unwind considerations.

They are called the European Gendarmerie Force (Eurogendfor) . They are based in Italy but funded and staffed by six signatory nations who are France, Italy, Holland, Spain, Portugal and Romania. However, according to the Treaty which established Eurogendfor they can operate in any EU country and are available to others who invite them to do so.

Can't be true. Romania cannot fund four Gypsies to push a dead donkey off of a dirt road.

Some jackass a couple of threads back commented that the Tylers caused us ZH readers to miss out on this latest stock ramp, to which I responded about this being the only trade recommendation they had made lately.

i don't follow these default swap compression trades too closely, but the underlying commentary and reasoning is +++

we're talking about transferring default risk fro TBTF (& FED fave) dexia to the countries formerly known as france and belgium, via guarantees (as w/ fannie & freddie in the US), with the deal and several billions of qatari capital coming into europeon bankstering play in a deal the 2 primeMinis shook hands over last weekend or so